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Editorial: SC Legislature should push to simplify, not control, this local tax

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The Municipal Association of South Carolina has developed a standardized business license application form and is testing a one-stop portal for businesses to renew and pay their annual fees.

Business owners, even more than individuals, tend to say their taxes are too high, even if they pay far less than what they’d pay in other communities or states. And about the only thing the Legislature loves more than pleasing businesses and cutting taxes — particularly when it doesn’t suffer from the loss of revenue — is telling local governments what they can and can’t do.

But that doesn’t mean that business complaints about taxes are never legitimate, or that the Legislature never has justification to change laws that affect cities and counties. There are, in fact, legitimate reasons to change state law regarding municipal and county business license fees. Just maybe not as much as businesses, their lobbying groups and some legislators would like to.

Nine of South Carolina’s 46 counties and 234 of its 271 municipalities require businesses that operate within their jurisdictions to have business licenses, and they charge various fees for those licenses, generally based on a business’s gross revenue.

That’s not a problem for a company that does all of its business in, say, the city of Charleston, or even in two or three jurisdictions. But every jurisdiction has its own license renewal date and its own forms to fill out, and that can create a ridiculous amount of paperwork — and expense — for businesses that operate in multiple jurisdictions, as many do. Think home-repair services and real estate agencies, or even restaurants with several locations.

So it’s perfectly reasonable for the Legislature to set a uniform business-license renewal schedule. It’s perfectly reasonable for the Legislature to require local governments to use a standard application and renewal form — and to use a single portal that allows businesses to apply and pay for all of their required licenses at once.

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It’s even reasonable for the Legislature to set some broad parameters — requiring businesses to pay license fees based only on the business they do within a given jurisdiction, for example, and possibly changing the basis for the fee from a business’s gross income to its profits.

What’s not reasonable is for the Legislature to force cities to throw away the standardization process they’ve been working on for several years. About 130 municipalities already have adopted a standardized ordinance, and, as The Post and Courier’s Andrew Brown reports, the Municipal Association of South Carolina is in the final stages of developing an online portal where businesses can pay all of their license fees at once. Lawmakers should set a reasonable deadline to get that program up and running — and for all cities and counties to use it — rather than requiring the Secretary of State’s office to start from scratch and create its own program and take over collection duties.

Also unreasonable: telling local governments how much they may charge for business license fees or how much they may increase those fees. County, city and town council members are elected by voters — in many cases by more voters than elect individual legislators — to run their local governments. An essential part of that is deciding how to raise revenue for local services.

Business owners and employees who don’t like the way local government is run have the same option as individuals: They can lobby the local government and even vote out council members they disagree with, or they can take their business elsewhere. That second option in particular is a powerful incentive for local governments to act reasonably.

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